Friday, September 12, 2014

Twilight zone

I feel like I am in the Twilight zone this week.

USDA confirmed mega crop
Conab replaced the 500,000 tons of soy they took away in August
(net result: same as July report)
Soybean prices break into new lows
Multiple crop size estimates out of Brazil ranging from
94-98 mmt tons of soybeans for 2015
The dollar rallies to 2.35:1 on the likelihood that Dilma will
be re-elected and finish running the country into the ground
(This acts like a snorkel to help Brazilian farmer keep his head above water)
Soybean prices in Sorriso, MT are quoted at US$ 7.18/bushel.
(Satellite elevator receiving stations will likely have a 6 handle on price)
Brazil will increase Bio-diesel ratio to 7%
Brazil will increase ethanol blend to 27.5%
Conab held its 3rd corn auction this week and corn is hauling ass to
port to fill commitments  before USA crop comes online
Argentina is holding boatloads of old crop soy in silo bags
Brazil farmer is 11% sold new crop soy

What is wrong with this picture?  See previous blog post:

Everyone is hell bent to plant soybeans and lose money.
It´s like the Brazilian soybean farmer has been watching the Addam´s

The more money Gomez loses trading and growing soybeans
the hornier Morticia gets ???

2015 does not make sense under current dynamics.

I think everyone except maybe FC stone/Celeres is too optimistic this year.

It is a catch 22 scenario:

Farmers cut back on inputs and productivity goes down.
Low 90 mmt ton crop-  prices stabilize

Farmers shoot the moon(good weather) and we produce 98mmt.
Soybeans drop to 7 dollars in Chicago.

Blood in the streets everywhere...........

Either scenario is not optimum.

Conservative numbers will be my mantra in coming months